Whitehaven Coal Limited

ASX:WHC

Whitehaven Coal Limited

ASX:WHC
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$6.09 (+1.8%)
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#490
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Forum Topics WHC WHC 20% Dividend on Offer

Pinned straw:
wtsimis
Added one year ago

Taken a 1% position of portfolio Friday 25th August in Whitehaven following release of results last week and pull back in share price on Thursday 24th and Friday 25th August .

This is not where i normally invest and have NO interest in coal playing a role in my long term portfolio but would like to tease out the rational .

In the coming 14months the dividend yield for Whitehaven looks to read as follows :

  • 2nd Half 2023 = 0.42c per share . Confirmed but goes ex-dividend on the 31st August.
  • Assuming 2024 dividends remain the same ie 32c per share in 1st Half and 42c in 2nd Half
  • Total dividends on offer equate to $1.16 per share.


  • Closing share price is $6.5 = 17.8% FF.
  • Grossed up we are talking 20% plus.


I recognise the risks in light to the tightening monetary environment that's playing out but aren't we in the midst of energy demand being greater than supply and if the monetary tightening does drive spending to be lower and thus thermal coal prices lower isn't the next move for RBA going to reduce rates and thus stimulate economy drive commodity prices higher again.

Please get me to see what i am missing ???

Risk reward seems favourable.
RhinoInvestor
Added one year ago

Rapidly declining (although still elevated coal price)

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I think the dividends will be coming back down the declining side as well.

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That said. I'm still expecting a higher than market dividend percentage for the next quarter but think there might be quite a bit of capital also lost as price declines. I know it's not the environmentally appropriate thing to wish for but I'm hoping for a very cold Northern Hemisphere winter this year because I'm going skiing and would like to see one more good dividend quarter for the coal miners before I think about unloading them.

DISC: HELD IRL in my SMSF with a basket of dirty Hydrocarbon companies I'm not proud of but that are offsetting my small cap losses for the time being (not held in Strawman as I only track things outside ASX200 in my strawman portfolio)

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Arena42
Added one year ago

Hey mate, white haven sells their coal closer to the spot price of this index https://www.barchart.com/futures/quotes/LQ*0/futures-prices?page=1

5
RhinoInvestor
Added one year ago

So futures pointing towards a coal price that should sit around current for the next 6 months at least (hopefully vindicating my hypothesis of trying to ride the hydrocarbon wagon for another 6 months at least).

However in response to the original hypothesis from @wtsimis, it’s not at 400 like it was a year ago or even near the prices from the first half of this year which contributed to the super-sized dividends.

As such, I’d expect dividends to start to drop and possibly share price as well. There is a lot of devil in the detail of thermal coal vs coking coal prices as well but off the top of my head I can’t remember the exact mix for WHC.

8
wtsimis
Added one year ago

Thanks @Arena42 and @RhinoInvestor . Really appreciate your insight .

Will monitor the coming days with interest as WHC goes ex-div as does Yancoal.

I take it the correlation of the share price to the spot coal price is strong?

If so, does this mean the companies own forecast of revenues are virtually useless ?

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